Confidence lowest in two years

Business confidence among small and medium sized manufacturers fell at its sharpest pace since January 1999, according to survey by the CBI.

The Regional Trends Survey, which covers almost 1,000 manufacturering businesses in the UK, shows a decline in confidence in all regions of England, Wales and Northern Ireland. But the sharpest falls were registered in the East of England, the South-East and London, and the South-West. Export confidence for the coming year fell significantly in these regions.

Sudhir Junankar, CBI associate director, economic analysis, says: 'With confidence falling and manufacturers' margins under further pressure, plant and machinery investment intentions are not surprisingly negative. For the first time since the UK economy slowed down during 1999, firms consider uncertainty about demand to be the key constraint on their investment plans.'

The CBI said the most significant change compared to its last quarterly study was in the South-West where business confidence has deteriorated dramatically. In the final quarter of 2000 this area showed the sharpest rise in confidence, now it shows the steepest fall. But the CBI said it believed the change could well be overstated due to the foot and mouth crisis.

The North registered large falls in confidence, as it did in the last survey, but the decline this time was not as large as in the south. But the North-East and North-West regions, along with the East Midlands, saw the sharpest decline in export orders and the steepest fall in output of the whole study.

Not surprisingly then, job cuts were particularly severe in these northern and midland regions. There were also large job cuts recorded in Wales, Yorkshire and Humberside, although Northern Ireland showed positive improvement in employment for the fourth consecutive survey.

'Manufacturing has failed to sustain the gradual upturn in output seen at the end of last year,' says Peter Gutmann, associate director of business strategies at the CBI. 'This has happened against a weakening global background and with sterling holding up against the euro.'

And his forecast is not optimistic: 'With the downturn spreading to new economy sectors such as electronics, further widespread job losses are inevitable, and the south of England can expect to share the pain.'

Estimates, based on the survey results, show that a further 17,000 manufacturing jobs will have to be shed in the second quarter of 2001.

Against a background of global economic slowdown and falling confidence, small businesses need all the help they can get. A new company DPO has been formed in an attempt to channel cash investments (from as little as £1,000) from private investors.

DPO gives members of the public the chance to invest in new business ventures and get unquoted shares in the form of direct public offerings. Independent financial advisors will play a key role in channelling the investment from retail customers, and in many cases there will be tax advantages for those investors (in a similar way to VCT investment).

Those interested in investing can call DPO on 020 8614 1901 or visit the website by clicking here